Youth ‘debt investment’ surpasses 38 trillion won in first half

Seoul [South Korea], Oct. 5 (ANI / Global Economic): In the first half of this year, young people between the ages of 10 and 30 borrowed more than 38 trillion won in loans from brokerage firms to invest in stocks. There is growing concern that if stock prices fall, young people who have invested in debt may suffer significant losses.

According to the report received by Justice Party lawmaker Jang Hye-young from the National Assembly Strategy and Finance Commission of the Financial Supervision Service on the 3rd, new loans from brokerage firms amounted to 185. 865 billion won in the first half of this year. Among them, the amount of new loans for young people aged 10 to 30 stood at 38.7453 billion won, or 67% of the total loans borrowed by young people (57.063 billion won) last year. If the current trend continues, the loan amount is expected to exceed last year’s by the end of this year. At the end of June, new guaranteed loans for young people also amounted to 3.5 trillion won.

It is analyzed that the number of young people who take out a loan to invest in stocks has risen sharply as it has become easier to raise funds at low interest rates since COVID-19 and asset prices are also increasing. 11.72 million of the 21.15 million securities accounts newly opened this year were accounts for young people, or about 55%. In addition, the youth account balance in the first half of this year was 141 trillion won, more than double compared to the end of 2019 (57 trillion won).

However, “debt investing” always comes with risk. The annual interest rate on credit loans from securities companies is 4-8% depending on the length of the loan and secured loans are 7-9%. When taking out loans to invest in stocks, the benefits of rising stock prices are limited and losses may be incurred more if stock prices fall. Also in the case of credit lending, securities firms can arbitrarily dispose of borrowers’ shares if stock prices fall below the collateral ratio (around 140%). Lawmaker Jang said, “If young people with relatively low incomes and assets compared to other generations take on excessive debt to invest in stocks, their real lives can be affected by fluctuations in the asset market. (ANI / Global Economics)

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